Halaw v. Wilding (In re Wilding)

• Docket Number: 17-35624 (RG),Adv. Pro. 18-1154 (RG)
• Decision Date: 29 June 2023
• Parties: In Re MARLON J. WILDING, Debtor. v. MARLON J. WILDING, Defendant. SEAN AND LAURIE HALAW, Appellants-Plaintiffs,
• Court: U.S. Bankruptcy Court — District of New Jersey

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In Re MARLON J. WILDING, Debtor.

SEAN AND LAURIE HALAW, Appellants-Plaintiffs, v. MARLON J. WILDING, Defendant.

No. 17-35624 (RG)

Adv. Pro. No. 18-1154 (RG)

United States Bankruptcy Court, D. New Jersey

June 29, 2023

CHAPTER 7

GUILLERMO GONZALEZ, ESQ. Scura, Wigfield, Heyer, Stevens & Cammarota, LLP Attorney for Appellants-Plaintiffs, Sean and Laurie Halaw

EDWARD P. AZAR, ESQ. Law Offices of Edward P. Azar Attorneys for Appellee-Defendant Marlon J. Wilding, Debtor

OPINION

ROSEMARY GAMBARDELLA, UNITED STATES BANKRUPTCY JUDGE

Matter Before the Court

Before this Court is a remand by order of the District Court^[1] with instructions to this Bankruptcy Court for: 1) A determination upon application of the factors set forth in Poulis v. State Farm Fire & Cas. Co., 747 F.2d 863 (3d Cir. 1984) to the Appellants-Plaintiffs' Motion for Sanctions pursuant to Fed.R.Civ.P. 37; and 2) As to the Appellee-Defendant's Motion to Dismiss the Adversary Complaint, consideration of the doctrines of waiver and laches consistent with the law and facts set forth in the matter. Pursuant to the Remand Order, this Court entered a Joint Briefing Scheduling Order on December 9, 2021 establishing a briefing schedule for consideration of Appellants-Plaintiffs' Motion for Sanctions and for Appellee-Defendant's Motion to Dismiss the Adversary Complaint.

A hearing was held before this Court on September 8, 2022 to consider the parties' oral arguments. This Court reserved decision. The following constitutes this Court's findings of fact and conclusions of law.

JURISDICTIONAL STATEMENT

This Court has jurisdiction over this matter pursuant to 28 U.S.C §§ 1334 and 157(b)(2)(A) and (H) and the Standing Order of Reference from the United States District Court for the District of New Jersey dated July 23, 1984, as amended September 18, 2012, referring all bankruptcy cases to the bankruptcy court. This matter is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(A) and (H). Venue is proper in this Court pursuant to 28 U.S.C. § 1408.

I. FACTS AND PROCEDURAL HISTORY ^[2]

On December 22, 2017, the Debtor filed a voluntary bankruptcy petition seeking relief under Chapter 7 of the United States Bankruptcy Code. John Sywilok was appointed as Chapter 7 Trustee. A meeting of creditors pursuant to 11 U.S.C. § 341(a) (the "Meeting of Creditors") was scheduled for January 19, 2018 at 11:00 AM. The notice of the Meeting of Creditors (ECF 3) (the "Ch. 7 Notice") also stated that the deadline to object to discharge or to challenge whether certain debts were dischargeable was March 20, 2018.

A Certificate of Notice entered by the Court shows that the Ch. 7 Notice was mailed to the Appellants-Plaintiffs c/o their then attorneys Serafini and Serafini, 269 Hamburg Turnpike, Wayne, N.J. 07470-2131. The Debtor asserts that the Appellants-Plaintiffs did not appear at the Meeting of Creditors.

A review of the case docket shows that Appellants-Plaintiffs' current law firm, Scura, Wigfield, Heyer, Stevens & Cammarota, L.L.P., entered a notice of appearance as "Proposed Counsel for creditors, Sean Halaw and Laurie Halaw" on January 31, 2018. The Appellants-Plaintiffs also served the Debtor with a Subpoena for Rule 2004 Examination which was dated February 12, 2018 (the "R. 2004 Subpoena.") (See Sanctions Motion, Exhibit F). The R. 2004 Subpoena sought production of documents by March 2, 2018 and Debtor's testimony on March 9, 2018. The dates were continued because the Appellants-Plaintiffs assert that the Debtor did not respond. The examination was ultimately held a week later on March 16, 2018 and the Debtor submitted some, but apparently not all, of the requested documents. (See Sanctions Motion, Exhibit H). Neither party has specified which requested documents were produced by the time of the Rule 2004 examination and which documents were not produced. The transcript attached to the Sanctions Motion as Exhibit H contains a list of exhibits.

Appellants-Plaintiffs and their current law firm were actively involved in the Debtor's case for over a month prior to the deadline to file a complaint. The Appellants-Plaintiffs did not move for an extension of time to object to the Debtor's discharge of their debt or of all debts and no such extension was granted.

By way of background, the Appellants-Plaintiffs are creditors of the Defendant by virtue of an assault during a bar fight that occurred on July 25, 2004 involving plaintiff Sean Halaw ("Mr. Halaw"), the Debtor, and Kevin Maher ("Mr. Maher"), who accompanied Debtor to the bar. The Appellants-Plaintiffs assert pecuniary losses and damages caused by the Debtor's willful and malicious injury to Mr. Halaw. The Debtor pled guilty to aggravated assault with a five (5) year probationary term which was completed.

The Debtor alleges that he was a minor participant in the altercation and does not agree that his participation in the altercation caused Mr. Halaw to sustain any serious injuries. The Passaic County New Jersey Prosecutor's Office pursued criminal charges against the Debtor and Mr. Maher indicting both individuals on charges of aggravated assault. The Debtor accepted a plea offer to plead guilty to aggravated assault with a five (5) year probationary term rather than face the possibility of incarceration. Mr. Maher on the other hand, refused to accept the plea offer and was found not guilty of any charges, including a lesser included offense of simple assault, at the conclusion of a jury trial. Appellants-Plaintiffs claim that it was a different co-defendant named Allan Cortiana, Jr. who was found not guilty. See Reply, p. 4 and Exhibit A.

Mr. Halaw instituted legal proceedings against the Debtor, Mr. Maher, and others in the Superior Court of New Jersey, Law Division, Passaic County, Docket No. PAS-L- 3214-06. Neither Debtor nor Mr. Maher appeared in the civil proceedings and after a proof hearing was conducted, default judgment was entered on August 22, 2008 against both individuals for $200,000.00 plus $10,000.00 per quod to Laurie Halaw.

Mr. Maher filed a bankruptcy case before this Court, Case No. 11-12660, and the Appellants-Plaintiffs filed an adversary proceeding (Adv. Proc. 11-1687), asserting that the judgment was not dischargeable. Mr. Maher defaulted in that adversary proceeding and this Court, after conducting a proof hearing, entered an Order on August 7, 2012 finding that the judgment was not dischargeable as to Mr. Maher pursuant to 11 U.S.C. § 523(a)(6).

The instant adversary proceeding was commenced by a complaint filed on March 21, 2018 by the Plaintiff's current law firm, Scura, Wigfield, Heyer, Stevens & Cammarota, L.L.P. An amended complaint (ECF 2) was also filed on March 21, 2018 (the "Complaint.") The Complaint seeks a determination that the debt owed to the Plaintiffs is nondischargeable pursuant to § 523(a)(6) and objecting to the Debtor's discharge under §727 (a)(3), (a)(4) and (a)(7).

The Debtor filed an answer to the Complaint on May 8, 2018 (the "Answer.") In the Answer, the Debtor includes as his affirmative defenses that the Appellants-Plaintiffs "have failed to file an objection to discharge or an adversary proceeding within the time prescribed by the United States Bankruptcy Code" and the "Plaintiffs' objection and adversary proceeding are time barred." (Answer, p. 3).

The Plaintiff referenced a letter in the Sanctions Motion dated June 11, 2018 (Exhibit G) wherein the Debtor's counsel stated he believed the Appellants-Plaintiffs' Complaint was time barred.

The June 11, 2018 letter from Debtor's counsel to Plaintiff's counsel states the following:

As you are aware, our office represents Marlon J. Wilding in the above referenced matter. As I advised you, it is our position that your office filed the Adversary Complaint beyond the statutory timeframe and the notification given to my client at the time he commenced his bankruptcy proceeding. Therefore, our position is that your adversary proceeding is time barred.

Furthermore, the case law is quite clear that this is a dischargeable obligation. Despite the fact that the judgment indicates it is an intentional tort, the case law is quite clear that there must be some evidence of an intentional act causing the intentional injury. A simple act of assault and battery is not, in and of itself, an intentional act and therefore, subject to the bar of the discharge.

Further, I have taken the opportunity to review the adversary proceeding filed by prior counsel against Mr. Kevin Maher. It appears that Mr. Maher did not contest the adversary proceeding and default judgment was entered accordingly.

Based upon the above, it does not appear that you will be able to resolve the adversary proceeding without a full hearing.

Further, it is my understanding that the Bankruptcy Court requires that in all adversary proceedings the parties participate in mediation. Please provide me with some recommendations as to whom you propose so that I can review the same accordingly.

Thank you for your cooperation and assistance in this regard.

A Joint Scheduling Order was agreed to by the parties and entered on July 9, 2018, and a Mediation Order was entered on July 18, 2018. Nancy Isaacson was appointed as mediator.

The parties proceeded to mediation and a Mediation Report was filed on December 28, 2018 indicating a settlement was not reached.

Exhibit N attached to the Sanctions Motion filed on January 24, 2022 (ECF 61-11) includes an e-mail exchange in which the Appellants-Plaintiffs' counsel, Guillermo J. Gonzalez, stated the following to Debtor's counsel, Edward P. Azar, on January 3, 2019:

Ed,

I hope you had a good holiday season. We have not received discovery responses from your client in this matter. I understand that you

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